Texas has some of the highest homeowners insurance rates in the country; here's why
The Texas housing market is hot. With four of the state's metro areas featured on U.S. News & World Report's top 10, there is no denying that Americans are flocking to Texas.
However, it is no secret that buying a home in 2024 is hard. As the market starts to cool, some residents are feeling the pressure of increasing costs associated with ownership.
Most notably home insurance prices are skyrocketing. Since 2018, homeowners in the Lone Star State have seen a 50.9% increase in their insurance rates on average. That increase is the highest in the country in that period, and experts are predicting more rate increases in 2024. Here’s what to know:
Why are home insurance rates so high in Texas?
There is no single reason why insurance rates are rising, however, a strong case can be made that weather events linked to climate change have spurred an increase in payouts from insurance companies. Increasingly common severe weather events, from winter storms to hurricanes, now pose consistent threats to homeowners in Texas. Because of this, rates are expected to keep soaring.
Insurance rates in Texas have always been high, but 2023 took the state to a new level as the average annual cost of home insurance in Texas was $3,875 — which is 113% more than the average of $1,820 nationwide.
What states have the highest home insurance rates?
Texas nears the top of the list of states with the fastest-rising home insurance rates. The state currently ranks fourth highest. All the states in the top five are southern coastal states that have experienced threats from hurricanes or tropical storms in recent years.
Here are the top five states with the highest home insurance rates for a $300k residence according to Bankrate:
- Florida: $5,770 a year
- Louisiana: $5,710 a year
- Mississippi: $4,289 a year
- Texas: $4,039 a year
- Alabama: $2,969 a year
Why are insurance rates rising across the country?
The primary reason for inflating insurance prices is the increasing number of claims in recent years. The payouts connected to these claims mean that insurance companies are increasing prices to offset costs.
Government data show that 2023 was a record-breaking year for damaging weather and climate events. Last year, 28 such weather events were recorded, each totaling at least $1 billion of damages, which substantially exceeds the previous high of 22 set in 2020.
Most of these events were related to hail. Meanwhile, the consistent threat of hurricanes and tropical storms is causing some insurers to pull out of coastal states altogether.
Beck Andrew Salgado covers trending topics in the Austin business ecosystem for the American-Statesman. To share additional tips or insights with Salgado, email Bsalgado@gannett.com.